91视频下载链接

Merrill Lynch and Harvest Volatility Management Fined $9.3 Million for Exceeding Client Investment Limits

Posted on October 10th, 2024 at 3:19 PM
Merrill Lynch and Harvest Volatility Management Fined $9.3 Million for Exceeding Client Investment Limits

From the desk of Jim Eccleston at 91视频下载链接

According to SEC.gov, the Securities and Exchange Commission (SEC) has charged Merrill Lynch, Pierce, Fenner & Smith Inc., and Harvest Volatility Management LLC for exceeding clients’ designated investment limits, resulting in higher fees, increased market exposure, and financial losses. Both firms have agreed to pay a combined $9.3 million in penalties and disgorgement to settle the SEC's claims.

Harvest, the primary adviser for the Collateral Yield Enhancement Strategy (CYES), was responsible for managing accounts that traded options in a volatility index. Starting in 2016, Harvest allowed numerous accounts to surpass exposure limits pre-set by investors, with dozens exceeding their designated levels by 50% or more. This exposed clients to higher risks, while Harvest and Merrill earned larger management fees.

Merrill Lynch, which introduced clients to Harvest, received a portion of Harvest’s management and incentive fees, as well as trading commissions.

The SEC found that Merrill was aware of the excessive exposure but failed to notify affected clients, many of whom had existing advisory relationships with the firm.

Without admitting or denying the SEC’s findings, Harvest and Merrill agreed to cease-and-desist orders and censure. Harvest will pay $2 million in penalties, $3.5 million in disgorgement and interest, while Merrill will pay $1 million in penalties and $2.8 million in disgorgement and interest.

 

91视频下载链接 LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

Jim, Stephany and the whole team were a God send.  We felt like we were put into a situation where we had no advocate. Jim’s team came in with a strong, well laid out strategy on how to get our story heard. Where our outside compliance company had no ability to help, our Broker Dealer was impenitent, and the regulators were aggressive pursuing vague rules, Jim came like a barricade against an assault we did not understand. Though you pay member dues to be affiliated with FINRA and a B/D, you have no voice. The only thing that is truly heard in this un-level playing field is a bulldog’s bark like Jim’s. I would encourage anyone to call Jim and his team to find a real ally in the tough and complicated world of securities regulation. They are truly the best.

Greg P.

LATEST NEWS AND ARTICLES

May 13, 2025
Merrill's Investment Solutions Chief Outlines Growing Role for Alternatives in Client Portfolios

At Merrill and Bank of America Private Bank, alternative investments have become a core focus of portfolio construction, according to Financial Planning.

May 12, 2025
FINRA Clarifies Proposed Changes to Outside Activities Rule

FINRA released a statement this week addressing misconceptions surrounding its proposed updates to the rules governing outside business activities by associated persons of broker-dealers.

May 9, 2025
FINRA Suspends Former Wells Fargo Advisor Over Unauthorized Transfer in Elderly Client's Account

FINRA has fined and suspended former Wells Fargo financial advisor Jarrett Thomas after he executed a $50,000 transaction for an elderly client despite being informed that she was no longer capable of managing her finances.